Currency Experiment by Muhammad Bin Tugluq

Edward Thomas has described Muhammad Tughluq as “a prince of mooneyes”. He points out that one of the earliest acts of his reign was to remodel the coinage, to re-adjust its divisions to the altered values of the precious metals and to originate new and more exact representative of the subordinate circulation.”

A new gold coin weighting 200 grains and called Dinar by Ibn Batuta was issued by Muhammad Tughluq. He revived the Adali coin containing MO grains of silver in place of the old gold and silver coins weighting 175 grains. This change was probably due to a “fall in the relative value of gold to silver, the imperial treasury having been replenished by large quantities of the former metal as a result of the campaigns of the Deccan.”

In 1329 and 1330, the Sultan issued a token currency in copper coins. There were already examples of such a currency in China and Persia. Kublai Khan, the Mongol Emperor of China, had introduced a paper currency in China towards the close of the 13th century.

Gai Khatu, the ruler of Persia, made a similar experiment in 1294 A.D. with these examples before him; Muhammad Tughluq issued a decree proclaiming that in all transactions, copper tokens should be accepted as legal tender like gold and silver coins.

According to Barani, “This edict turned the house of every Hindu into a mint and the Indians of the provinces coined lakhs and crores of copper coins, with which they paid their tribute and bought horses and arms and fine things of all sorts. The Rais, the village headmen and land-owners grew rich on these copper coins but the state was impoverished.

In no long time distant countries would only accept the copper Tanka as metal and in places where reverence for the edict prevailed the gold Tanka rose to be worth a 100 copper Tankas. Every goldsmith struck copper coins in his workshop and the treasury was crammed with them. The fell so low that they were no more valuable than pebbles or potsherds. Trade being disrupted, the Sultan repealed his edict and in great wrath proclaimed that all the copper coins should be redeemed in gold or silver at the treasury.

Thousands brought them for exchange and their heaps rose up in Tughluqabad like mountains.” Barani tells us that the experiment was due to two causes. The first cause was the need of money to maintain the great army of conquest numbering 3, 70,000. The second cause was the deficiency in the treasury caused by the lavish gifts made by the Sultan.

Another probable cause can be the relative scarcity of silver in the market. According to Dr. Ishwari Prasad, another probable cause was the love of experiment on the part of the Sultan who was a man of original cast of mind, well-versed in the arts and sciences of the age.

The Sultan might have felt a powerful impulse for the experiment in a scientific spirit. The royal exhortations which accompanied the introduction of the currency and the subsequent behavior of the Sultan effectively rebut the charge of eccentricity which has been brought against him by modern writers.

Many reasons have been given for the failure of this monetary experiment of Muhammad Tughluq. It is pointed out that this carefully organised measure failed because it was in advance of the time and the people could not realise its real importance. To the people at large in those days, brass was brass and copper was copper, however urgent the needs of the state might be.

Another cause of the failure of the experiment was that the Sultan could not make the issue of the copper coins a monopoly of the State. To quote Edward Thomas, “There was no special machinery to mark the difference of the fabric of the royal mint and the handiwork of a moderately skilled artisan.

Unlike the precautions taken to prevent the imitation of the Chinese paper notes, there was positively no check upon the authenticity of the copper tokens and no limits to the power of the production by the masses at large.

The contention of Elphinstone was that the failure of the token currency was due to the insolvency of the king and the instability of his government. This contention has been found to be groundless as the Sultan successfully withdrew all coins by paying gold and silver coins for the copper tokens. Had the Sultan been insolvent, he would not have been able to give gold and silver coins in exchange. Brown attributed this currency muddle to the shortage in the supply of the silver in the world during the 14th century.

There was a similar scarcity of coins in England in the reign of Edward III about the year 1335. Similar difficulties were experienced in other countries. Prof. IVIohd. Habib gives a different and more plausible explanation in these words: “The mint had a special type of bronze alloy for the coins, which could be easily distinguished on the touchstone but the secret of the proportion of the metals in the bronze coins could not be discovered by the goldsmiths.

When people took gold and silver coins in those days, they had the coins weighed (to make allowance for clipping) and also tested on the touchstone for purity of metal.

The Sultan expected the public to follow the same practice in regard to his token coins. But in this matter the public failed him. Consequently, many forged coins got mixed with the treasury coins and as the forged coins became current and the government was unable to prevent this, more and more coins were forged.

A bronze coin would be at least worth its weight in bronze-i.e., about 50 bronze coins would be normally equal to one silver Tanka. But forging the bronze coins was an offence. So a forged bronze coin may meet any fate, for a new element- fear of punishment-also entered into the determination of its value.

In the distant provinces it circulated at one-half of its official value in terms of the silver Tanka; in the capital people would be afraid of being found in possession of forged bronze coins; they would throw them away or keep them in order to melt them into bronze vessels later on. The whole operation got beyond the control of the government.

Too many forged coins got into circulation and the failure of the experiment caused a have in the market. It was not possible to punish those in actual possession of the forged bronze coins, because they were innocent. In fact, strange to say, nobody was punished It was understood from the very beginning that the treasury would redeem every bronze coin it had issued.

The Sultan now ordered this to be done. People brought to the treasury the bronze coins they had. The treasury redeemed the bronze coins it had issued as a matter of treasury-conscience; it rejected the false coins but did not punish their owners because they were ‘bonafide’ possessors.

Heaps of these rejected bronze coins, which were probably melted later on, could be seen as Tughluqabad. But forged bronze coins not brought to the treasury continued to circulate at their metallic value, especially in the provinces and have survived to our days.'”

In addition to the forging of token coins, the people started hoarding silver and made all their purchases in token currency. The result was that a considerable quantity of silver was kept out of circulation.

The payment of land revenue was made in the spurious token currency. The Khuts, Muqaddams and Chaudhris became powerful and defiant. Rebellious elements purchased weapons and war material with the spurious token currency. Foreign merchants stopped bringing their wares to India and imports received a serious set-back.

About the token currency, Sir Wolseley Haig says that Mohd Tughluq understood the principles of a managed currency and he did not believe, as is suggested by some historians ignorant of those principles, that his command could raise the value of the baser to that of the precious metal.

Success might have been possible if the treasures had been efficiently supervised but unfortunately, no steps were taken to prevent fraud and hence it failed.